InvestmentNews.com is reporting that the sixth-largest U.S. bank, Morgan Stanley, is being sued by employees of its own company. The plaintiffs claim “their stock-option and retirement saving plans sustained losses in 2008 because the company invested too heavily in its own shares.” In a complaint filed in Manhattan federal court, G. Kenneth Coulter and five other participants in the plan say that its directors “breached their fiduciary duty by failing to manage the plans’ assets and by not providing accurate information.”
According to the complaint, the plans held $2.2 billion of Morgan Stanley stock at the end of 2007. By the end of 2008 the value of the company stock in the plans dropped to $673 million. The plaintiffs said, “Morgan Stanley and its stock were exposed to extraordinary risk as a result of the financial perils of the entire banking sector” and “company stock was an imprudent, inappropriate and exceedingly risky investment.”
A spokesman for Morgan Stanley, Mark Lake, declined to comment on the lawsuit to InvestmentNews.com.
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